"Not every building is a tear-down for a fancy new place, and additionally land is rare and costs are high for purchasing and starting ground-up, so this is a great option to many buyers in our area," Daniels said.

His comments came on the day we reported that Seattle-based Security Properties, one of the leading apartment investors and developers, paid $74 million for a World's Fair-era tower on First Hill in Seattle. Security Properties' Barrett Sigmund said his company plans to spend $15 million upgrading Panorama House at 1100 University St.

Rehabbing old buildings isn't just good for developers, though. The concept aligns with the Puget Sound region's penchant for green, environmentally friendly construction, as it uses far fewer resources than building new from the ground up.

Daniels said he and his colleagues are seeing more and more investors on the West Coast – and especially in the Seattle area – buy and rehab apartments. HomeStreet is providing bridge loans for rehabs at the Minor Apartments and Alki Beach Apartments in Seattle, and the Forest Creek Apartments in Kent. A bridge loan is a type of short-term loan taken out pending the arrange of longer-term financing.